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The forgotten frontier

If you aren’t an oil and gas professional or particularly clued in to the climate debate, you might be forgiven for not remembering all the energy around Carbon Capture, Utilization, and Storage (CCUS) research in Qatar a few short years ago. Big investments, prestigious collaborations, industry tie-ins – you name it, we had it. And we weren’t too shy to talk about it either. But over the last couple of years, what with all the belt-tightening and restructuring, some of these “extracurricular activities” have been silently placed on the back burner, none the wiser for it. However, something else has been happening over the last couple of years as well – the Paris Agreement and the unprecedented commitment to climate action. And all things considered, it’s time not only to put CCUS back on the agenda, but to push it near the top of the list.

CCUS is pretty self-explanatory. It’s the process of capturing carbon dioxide (CO₂) from power plants and industrial process emissions and putting them to use in other applications that require CO₂, for example in Enhanced Oil Recovery (EOR) which requires 70 MtCO₂ annually; two-thirds of this currently come from natural CO₂ sources and can be replaced with captured carbon. EOR is the practice of injecting CO₂ in oil fields to enhance hydrocarbon production (especially into mature oil fields in order to extract otherwise inaccessible oil) while storing the injected CO₂ permanently underground. Dedicated underground storage (without utilisation) is the other option, but admittedly a less popular choice.

Despite the first large-scale CCS plant coming online way back in 1972, there are only 15 in operation globally today (not counting the In Salah CO₂ Storage Project in Algeria which was shut down in 2011); most of them came online after 2013 and another six are scheduled to open by the end of 2017 (all but six of the whole portfolio of projects will primarily feed into EOR). This is real albeit belated progress in the face of serious roadblocks like massive capital costs, limited policy and regulatory support and nil-to-negative public perception of the technology. These 21 plants together will be capturing 40 MtCO₂ annually from this year; by 2050 we’ll need to capture one hundred times that every year. If not, we’ll have to invest at least an additional $3.5 trillion in power generation in order keep global temperatures within relatively safe limits. But there are concerns that this momentum is stalling.

The lack of adequate support coupled with first-of-a-kind technology challenges have contributed to the cancellation of 22 advanced large-scale CCS projects since 2010. Additionally, the recent commodity market downturn has significantly reduced the interest and capacity of oil, gas and coal companies to invest in CCS. No investment decisions on large-scale projects have been taken since 2014 and few new projects are being brought forward. And although more than $30 billion in funding was announced for large-scale CCS projects between 2007 and 2010, only $2.8 billion in public funds was actually invested between 2009 and 2014.

At COP22 in November last year, where there was a noticeable shift in talks from negotiation to implementation, CCS was discussed at the highest levels. At the GCC pavilion at a high-level ministerial panel, the energy ministers of Saudi Arabia, the US, the UAE, Canada and Australia got together to speak about the uptake of CCS in their respective countries and the future of large-scale implementation of the technology. The Middle East’s only large-scale CCS plants are in Saudia Arabia and the UAE and all of the six upcoming plants are in the US, Canada and Australia. It was somewhat ironic that minister after minister, from US Energy Secretary Ernest Moniz to Saudi Arabia’s Minister of Energy, Industry and Mineral Resources Khaled Al Falih, stressed the importance of CCS while in the same breath insisting that additional policy support was need to get it off the ground.

Paul Simons, Deputy Executive Director of the International Energy Agency (IEA), who spoke at the beginning of the panel, said that CCS was not optional for Paris Agreement targets. In the midst of the unprecedented energy transformation challenge that the world was facing, he compared CCS to a sleeping giant that could deliver essential emission reductions both in the power sector and industry. But to realise this, many efforts needed to come together. “Political commitment and financial support should be made clear thorough policies, subsidies and incentives,” he said.

It’s in the numbers

It is known that even if the targets in the individual Nationally Determined Contributions (NDC) of all the countries are met, average global temperatures will rise to about 3-3.5°C above pre-industrial temperatures; much higher than the relatively safer 1.5 C rise that the Paris Agreement is aiming for. The IEA projects a major contribution by CCS (15% to 20%) within the portfolio of climate change mitigating tools in the 2°C scenario by the year 2060. This scenario calls for more than half of CCS deployment in power generation and of this almost 75% should occur outside of the OECD. In Energy Technology Perspectives 2010, it was noted that CCS will need to contribute to 20% of total emission reductions by 2050 for GHG to be reduced in the most cost-efficient manner. To enable CCS to meet this one-fifth contribution, it will be necessary to deploy around 100 CCS projects by 2020, and over 3,000 projects by 2050. This goes to show how essential CCS is to the low carbon energy transition strategy. It’s difficult to achieve 2C without CCS; impossible to go below 2C without it.

And as the pressure mounts on countries to ratchet up their climate goals in the NDCs, this will become more obvious. “In this first round, most NDCs talk about deploying existing, low-cost tech; all the low-hanging fruit, as they say. It’s never going to be enough,” says Brad Page, CEO of the Global CCS Institute. “We absolutely need to deploy all technologies that are at our disposal. CCS is necessary technology and yet, while in excess of a trillion dollars worth of investment has be committed towards renewables since 2006, only a fraction of that has been allocated towards CCS. It’s not a competition but there needs to be policy parity to ensure CCS alongside renewable energy and energy efficiency initiatives can help us reach Paris Agreement targets.” In other words, CCS needs to be allowed to compete on a comparable basis with other clean technology solutions. Contrary to popular belief, renewable energy is not the only weapon we’ll ever need in our fight against climate change. Some industries like steel and fertilisers are impossible to decarbonise without CCS, because the CO₂ emissions are not related to energy use but rather to processes. So for a vast majority of the industrial sector, which accounts for a quarter of the global CO₂ emissions, CCS is the only solution. There is a school of thought that also considers CCS a better alternative when the economic cost of decarbonisation is too high, like relatively young and high-output coal plants that will have to be decommissioned. Sure, CCS is expensive now but the net cost of good policy is ultimately negative, Page says. “As we invest in it, it’s going to get better and cheaper.”

“When you look at cost curves of available clean technologies, hydro, energy efficiency and onshore wind are already extremely cost-effective. The cost of solar PV is coming down quickly and CCS will follow soon after, trailed by other currently less advanced technology like concentrated solar PV. Obviously the cheapest ones will be adopted first but they won’t get you far enough. In the next 3-5 years, as more countries are called upon to increase targets and ambitions, they will be challenged as to what else they are going to deploy. That’s where CCS will come riding into play and that will also drive its costs down.”

Winning the public debate

It’s difficult to deny that CCS is yet to win the hearts and minds of the public as a viable green solution. This is partly because there is a significant gap in perception about how ready the technology is; many still consider it experimental and not ready for commercialization. The financial feasibility of CCS is also often called into question. And it is argued that every dollar of public money that goes into funding or subsidizing CCS is one dollar lost to renewable energy projects. CCS is also viewed as an encouragement to bring more coal plants online and prolong fossil fuel use.

Now, the 100% renewables future is definitely possible and it is surely coming. But no one can predict with any certainty when it will be there. All energy projections we have now show hydrocarbons as part of the energy mix for several decades to come and though their share will continually fall, it will not be as fast as we need it to be. “Fossil fuels are going to be with us for a long time to come,” Al Falih said during the panel discussion at COP22. “The move away from hydrocarbons will be a long journey that requires huge investments and a lot of technology and innovation. In the meantime, greenhouse gas emissions are at an unacceptable level and we have to find abatement measures. And one of the key tools in our toolbox is CCUS; we can’t make the transition without it.”

This isn’t just the opinion of the energy minister of a major oil producer but stark facts. “To be honest, there is no reticence on the part of the power industry globally to move towards a 100% renewable future,” says Page. “Let’s be realistic about how fast we are going to get there. I don’t think it’s going to be in the next ten years. In 2040, we are still going to be dependent on fossil fuel for 70% of our power. It’s inconvenient but we have to deal with it.”

To increase public awareness and discussion about CCS it’s important to provide clear and careful explanations of the issues at stake. Public acceptance and engagement are critical elements of any development project. The 15 projects currently in operation around the world have not encountered significant opposition and, in some instances, are celebrated by the communities in which they are located because time and effort were committed in engaging with local communities, especially those located close to storage sites. “We have a responsibility to actually educate people a whole lot better,” says Page. “The public also needs to see a strong, well-recognised regulatory framework around CCS, so we know that it is not ad hoc and has been well thought out.”

The fact the CCS is seen as a “false solution” proposed by hydrocarbon companies and economies is also hurting its image among those fighting climate change. Only a few days before COP22, the Oil and Gas Climate Initiative was announced. Under this programme, 10 oil majors including Saudi Aramco, British Petroleum and Statoil have committed to spend $1 billion over the next 10 years on reducing carbon emissions. A large portion of this investment will go towards CCS. For many, this confirms their worst suspicions. “For now CCS is considered an unstable strategy for climate change mitigation. Environmental NGOs think that CCS is a strategy for oil producing economies to sustain global consumption of fossil fuels,” says Dr I-Tsung Tsai, Assistant Professor in the Department of Engineering Systems and Management at Masdar Institute. “That argument is difficult to break. But if fossil fuel use can be made sustainable, it can help people in very low-income countries develop. But ultimately these people have no bargaining power in the international arena to help lobby on behalf of these technologies,” he says.

Show me the business case

CCUS can be quite relevant to countries in the MENA region for three reasons – the vast oil and gas fields provide excellent CO₂ storage sites in the order of 60 Gt; carbon storage via EOR may contribute to oil reduction while reducing CO₂ emissions; and CO₂ for EOR substitutes gas for EOR and increases the output of gas as a valuable product.

Despite this, regulation around CCS in the GCC is non-existent. In any case most CCS-related activities are related to national oil companies which have never been explicitly regulated. However, the lack of regulation is not the key factor that blocks CCS deployment, says Dr Tsai. “Lack of regulation is a result of lack of good business models (so there is no incentive to introduce CCS legislation and regulation). In the GCC, cost and good business models remain the major challenge to the deployment of CCS in the region up to this moment.”

Dr Tsai also points out that while the uilisation of captured carbon in oil recovery is enticing, the process is complicated, which might explain why oil companies in the region haven’t embraced it more enthusiastically. “Specifically, even though the technology for capturing CO₂ from specific industrial production processes is not region-specific, optimal injection of CO₂ is highly reservoir-specific. As a result, local testing of CO₂ injection and storage is critical,” he says. “CO₂-EOR introduces further technical challenges: for example, how to incorporate CO₂-EOR into existing EOR practice (e.g. water flooding, water alternating gas injection).”

However, he maintains that the key challenge now for GCC countries is to get the economics right (minimizing the cost) so we can identify the feasible business models even without extra incentive (such as CCUS for Clean Development Mechanism). “We need to find a good revenue flow to convince a business that is already in operation. Retrofitting this new machinery may be difficult due to space and technology constraints; power generation is the major source of CO₂ emissions in the region. How are we going to find economic value for them?” asks Dr Tsai.

This is probably why Qatar does not have large-scale CCS projects like KSA and UAE even though it has been one of the regional leaders in CCS research. “Qatar has initiated very large research programmes such as the Qatar Carbonate and Carbon Storage Research Centre (QCCSRC). Qatar also established a Qatar CCS Multi-scale Imaging Laboratory in Imperial College London. As CO₂-EOR is not as important to Qatar as it is to UAE and Oman, it is reasonable that the Qatari government takes a wait-and-see approach on CCUS, as there exists a life cycle loss from deploying inefficient technology rather than implementing a high-efficiency technology,” explains Dr Tsai.

Qatar is prepared

There is a high degree of confidence that global storage resources are more than adequate to accommodate future requirements, even under highly ambitious scenarios. For example, estimated geological storage resources in the United States is between 2,376 Gt and 21,000 Gt, around 1,500 Gt in China, and 78 Gt in the United Kingdom. To put this in context, the cumulative global storage requirements between now and 2050 in the 2C scenario are 94 Gt. However, further work is required to convert this theoretical storage capacity into “bankable”, practical storage facilities, where there is a high degree of confidence that desired amounts of CO₂ can be injected at desired rates.

This is where the likes of QCCSRC come in. Funded by Qatar Petroleum, Qatar Science and Technology Park and Shell, the centre is headed by Dr Martin Blunt. The 10-year programme with an overall budget of $70 million was tasked with understanding CO₂ storage in a Qatari or Middle-Eastern context, i.e., the process of injecting CO₂ deep underground into carbonate rocks which are the most prevalent kind in Qatar. This involves the study of rock properties, how CO₂ can be trapped within the sub-millimetre gaps in porous rocks, storage in depleted oil and gas field, fluid-rock interactions, etc. While the research is based in Imperial College London, several Qatari PhD students are involved in looking at the underlying science of carbon storage. While not directly involved in demonstrative project or site identification in Qatar, Blunt says their work at the centre will be able to provide the scientific info necessary for someone in Qatar to implement a CO₂ storage scheme with confidence.

Eight years in, the centre has been able to enormously advance the understanding of carbonate geology. Dr Blunt says “We are certainly at a stage where we can provide valuable information for a storage project.” Shutting down talk about CCS still being experimental, he says the barriers to global implementation are not scientific but are rather political, legal and financial barriers. “The consensus among scientists is that our understanding of the process is officially evolved to a point where it can be rapidly implemented at scale. There is no big technical problem that we can’t overcome. It only needs the political will, money and legal framework.”

This is probably why Dr Blunt shares the frustration of the scientific community and industry experts who feel we are not applying CCS as rapidly as we could. “We want to be doing this now but the progress is agonizingly slow. We have to start having more demonstrative projects that involve the full cycle, from collecting CO₂ from power stations or industrial sites, piping it to storage sites and injecting it underground. We need to learn by doing; build up experience and expertise.”

The New Player In Town

The latest large-scale CCS plant to come online is in the neighbouring emirate of Abu Dhabi, where the carbon dioxide captured from steel manufacturing process is being utilised for enhanced oil recovery.

A joint venture by Masdar and the Abu Dhabi National Oil Company, Al Reyadah is the region’s first dedicated CCS company focused on commercialisation. When its CCS plant officially went online in November last year at the Emirates Steel Industries, it became the first large-scale project to capture CO₂ from a steel manufacturing plant. Speaking to Qatar Today, the CEO of Al Reyadah, Arafat Al Yafei, says the plant will capture 800,000 tonnes of CO₂ annually, which will be used for EOR at the Rumaitha oil fields, helping ADNOC save on the natural gas that is traditionally used for this purpose.

“There are different solutions being proposed to limit temperature rise to below 2°C, with CCS and energy efficiency being on top of the list and expected to play a very important role to achieve this,” Al Yafei says. Al Reyadah company represents a perfect example of a practical initiative for a sustainable CCS solution for climate change. “Under ADNOC and Masdar, Al Reyadah Company is going to play a crucial role to establish CCS solutions on business terms and promote developments for CCS industry, which will eventually support larger CCS implementations on the global scale.”

Al Yafei believes that the CCS business is a real need have due to the fact that the region’s huge oil and gas fields are increasingly seeing more of EOR development schemes, where CO₂ utilisation will become a key component. There are a number of future opportunities that they will be looking at. “As it is a new business, we work seriously with out partners to evaluate the opportunities and conduct the required due diligence from multiple aspects. Meanwhile, we are proceeding in building the capabilities towards creating a CCS industry in the region that considers new technologies, business aspects and worlds challenges. Time is important to ensure that these projects are done correctly in order to meet the business objectives in the local and regional markets,” he says.

“Right now a utilisation strategy linked with oil companies and EOR is the most viable way to implement large scale CCS in our region,” Al Yafei says. “Our aim here at Al Reyadah is to prepare the platform, set an example, and build expertise in the business. We initially want to show governments and industries that CCS is technically and commercially viable. Eventually this will be expanded to other kinds of utilisation, be it in beverage industries or food preservation or medical uses. If we can demonstrate a revenue stream, there will be an uptake in the CCS business. Just subsidies will not be enough to make this concept sustainable as we have seen in the past,” he says.

For the time being, the new CCS plant is able to capture most of the steel plant’s CO₂ emissions, which is processed and transported to the oil fields for EOR. However, this volume is not even near the potential demand that is estimated for ADNOC CO₂ EOR plans. Accordingly, Al Reyadah is working closely with ADNOC and its partners to ensure the next CCUS projects are aligned to ensure timely implementation. “The future captured CO₂ volumes will also be directed towards EOR as the requirement in this area is huge.”

If done right, Al Reyadah can set a regional example of the elusive CCS business case that we have been looking for. “All parties involved in the Al Reyadah CCUS initiative are benefiting in one way or the other. ADNOC is able to obtain the CO₂ it needs while simultaneously supporting the global environmental initiatives. Masdar on the other hand is the catalyst coming from a renewable/clean energy business, while Emirates Steel, an intensive energy utiliser, emitting a lot of carbon has become the first steel plant in the world to produce free carbon steel which has a marketing advantage [Green Steel],” Al Yafei points out. From where he sits, it’s a win-win situation all around.

Update on CCS projects in the region

In the GCC region, all countries have started the engagement in CCUS, with major activities found in the UAE, the KSA, and Qatar. The UAE government has identified CCS as a key component of national GHG mitigation plans in its national communications to the UNFCCC. As the major oil-producing emirate of the country, the Abu Dhabi government is developing, through Masdar, a CCS network bringing CO₂ from emitters to the Abu Dhabi National Oil Company (ADNOC) for enhanced oil recovery (EOR). In addition to the completion of a two-year CO₂-EOR pilot project in November 2011 at an onshore field, Masdar announced in early 2012 that it would proceed to tender for a CCS project with Emirates Steel Industries (ESI), handling 800,000 tons of carbon annually and connecting an ESI factory to an ADNOC oil field. Masdar also has a 60/40 joint venture with British Petroleum (BP) in developing Hydrogen Power Abu Dhabi (HPAD), a commercial-scale hydrogen-fuelled power plant incorporating carbon capture and storage. The project was placed on hold in January 2011 due to issues associated with negotiating prices for the CO₂ and electricity produced at the hydrogen plant with its two main customers: ADNOC and Abu Dhabi Water Electricity Authority (ADWEA). The Dubai Integrated Energy Strategy 2030 also calls for consideration of CCS-equipped coal power in the next ten years, and the Emirate of Ras Al Khaimah has announced feasibility studies for a CCS-equipped coal plant.

Saudi Arabia, as the leading oil-producing country in the world, can increase oil production without the use of EOR. When needed, Saudi Aramco uses highly optimized and cost-effective water flooding operations for EOR. Nevertheless, the country is developing the world’s largest CO₂ purification and liquefaction plant in Jubail. The plant will bring 1,500 metric tons per day of raw CO₂ coming from two ethylene glycol plants to three SABIC-affiliated companies for enhanced methanol and urea production. The country is in the process of developing several similar CCS projects, including some pilot projects on CO₂ for EOR. The Qatar Fuel Additives Company will install a CO₂ capture plant in its methanol production plant by 2014. Qatar Petroleum has a joint venture with Shell and some academic institutions in establishing the Qatar Carbonates and Carbon Storage Research Centre (QCCSRC). Bahrain has a CCS project that captures flue gases from an existing petrochemical plant for urea and methanol production. In 2010, Kuwait launched a carbon project which will capture more than 150,000 tons of CO₂ annually from Equate, a large petrochemicals company, for food and beverage production. The current CCUS engagement of Oman is primarily focused on research and development of feasible CCUS technology. It can be noted that all current developments in the GCC region are initiated by the public sectors, with major effort focusing on feasibility validation of various stages of the CCUS value chain in the local context. Despite the clear interest for CCUS in this region, it is recognized that large-scale deployment of CCUS cannot be realized without the establishment of formal legislation and regulation.

(Courtesy: UN working paper on ‘Strengthening the legal and regulatory framework in the Gulf Cooperation Council countries to promote the deployment of carbon capture, utilization, and storage’, by Dr I-Tsung Tsai, 2014)